Seminar 3: “The Market Economy and Capitalism.”
Institute of Oriental Culture, The University of Tokyo
Thursday December 23, 1999
1. The aim of the seminar (SEKIMOTO Teruo, The University of Tokyo)
Recently, the term “market economy” has tended to be used almost as a simile for “capitalism.” “Capitalism” too is regarded as a modern phenomenon, while premodern society is seen as being marked by the prevalence of self-supporting economies. According to this commonly accepted view, non-western, local societies have been described only as passive, prescribed as undergoing change under the influence of an active agent, the world-wide, global market economy. It is hoped we will be able to reexamine and criticize such a framework by looking at examples from the societies of China, South-East Asia and the Middle East.
It is probably necessary also to reexamine in a critical manner the view that “true” capitalism is the industrial capitalism developed in western Europe and exported throughout the world. It should also be possible to investigate in detail what happened when the local societies joined with the market and with capitalism, in a way different to the humdrum theory of social evolution.
As a preliminary assumption, I would like to look briefly at the concept of capitalism, even if we do not arrive at a single, consistent definition. Fernand Braudel (Civilization and Capitalism, 15th-18th Century) takes a broad view through a three-tiered structure of material life, market economy and the action of capitalism, not regarding capitalism as a special, modern phenomenon. Perhaps we too should follow his example. What would be the result of applying his theory, based on Europe in the fifteenth to eighteenth centuries, to China, South-East Asia and the Middle East? Did capitalism, usually associated with the age of industrialization of a period he did not discuss, conclusively make swift progress from the time before industrialization? We can focus on “industry,” like Marx and Weber, or on activities leading to differentiation, hierarchies, monopolies, the mobilisation of power, and the propagation of the value of money, like Braudel, and IWAI Katsuhito and his followers. Which view we take may be influenced by which area we study. Whether we are discussing China, South-East Asia or the Middle East, when we talk about centres of large-scale market economies which have developed regionally, there is a tendency for us to speak about the economic dynamics of an individual region vis a vis the west, and if we take up the more self-sufficient economies of the peripheries, there is the further tendency to speak of the changes brought by modern capitalism and colonialism. Whichever way we look at it, however, we should be conscious of how we use concepts connected with existing well-known economic and historical theory.
There are also problems that we should consider concerning the concept of market economy. Since the fall of the socialist bloc, this word has tended to be used in the same sense as global capitalism, but of course this term can call to mind a variety of forms. Types include small regional markets where surplus goods and specialized products are exchanged between self-supporting regional communities, long distance trade governed by special monopolistic rules, where the ruling authority intervenes, and the modern world-wide market economy. Are these three types sufficient? Has anything been overlooked or fallen from sight in connection with the capitalism described above? And if we accept these three types, what are the connections between them? Is there a need for criticism or a revision of the general understanding that the premodern combination of local markets and long distance trade was swallowed up by the modern capitalist market economy?
With the above in mind, let us consider the relationship between local economies and the large system that goes beyond them. I referred above to the problem of whether non-western local societies were no more than passive objects to be buffeted by outside influences. KASUGA Naoki has written, “There are qualitative differences in how [local societies] adopt capitalism, based on differences in modes of production in local areas and in capitalism itself.” (“Economics I, Culture in a World System” [in Japanese], in YONEYAMA Toshinao (ed.), An Introduction to the contemporary Anthropology, Sekaishiso-sha, 1995, p. 104). Similarly, the anthropologist Marshall Sahlins writes that the “effects” of the world system on Hawaiian culture can only be understood through how the Polynesian system acted to absorb the experience of capitalism into its own culture (M. Sahlins, “The political economy of grandeur in Hawaii from 1810 to 1830,” in E. Ohnuki-Tierney (ed.), Culture Through Time, Stanford University Press, 1990). What we must consider is not how local societies change through contact with the market economy, but how the local “subject” makes compromises with capitalism and the greater market economy, how it adopts and digests them, and what kind of entanglements arise from this.
This way of speaking can be open to misunderstanding, since it depicts local societies and the larger, external system simply as two subjects, and so drives us into making a choice between two alternatives - seeking for local uniqueness or speaking of the universal power of the larger system. In fact, both are two sides of the same coin, their relationship being one of mutual creation. Capitalism has anarchy and instability as its own properties, and is not an omnipotent manager that control everything. On the other hand traditions of local modes of life are not a coherent core transcending time, but always changing themselves through their relations with the outside, they give rise from within to a self-image which, only in their relationship to the outside, appears to be unchangeable and coherent. However, at the base of the official cultural self-image which has been made conscious and put into words there is, entwined with embodied ethnic knowledge, what I would call the pre-culture and the pre-tradition which have not been verbalised, based on the customs and systems of local life. Capitalism’s anarchic dynamism may develop depending on the premise that such culture and traditon support social life at its base. It is our task to investigate the possibility of describing the mutual workings of the local and the larger systems, rather than depicting the isolation of local societies, or speaking only from the side of the system as does the Wallerstein school.
2. ISHIKAWA Noboru (Kyoto University, Center for Southeast Asian Studies; South-East Asian Cultural Anthropology)
The International Rubber Agreement of 1934 and Smuggling: The rubber market of western Borneo and the burnt-field cultivators
2-1 Europe kept the international price of rubber low by means of the International Rubber Agreement, which determined how much rubber each country with colonies in South-East Asia could produce and export. As a result, there grew up between Dutch Borneo and Sarawak a trans-national market of smuggled rubber; rubber produced in Dutch territories flowed into Sarawak, where the market price of rubber from Dutch territory was higher. Sarawak was excluded from rubber production and local farmers turned to a self-sufficient economy centred on dry rice production using the burnt-field technique.
2-2 The change that occurred in western Borneo as a result of the Agreement can be seen in terms of Fernand Braudel’s concept as either the node between the world capitalist economy and the local market economy (exchange economy), or as a conjuncture of political history (the Rubber Agreement) and social history. Moreover, behind it we can also see the (long-term) structure of a self-sufficient economy based on Borneo ecology and commodity crop production.
2-3 The Rubber Agreement caused changes in the local society by encouraging on one side the emergence of trans-national smugglers and overseas Chinese merchants, and on the other, the change to a local self-sufficient economy based on burnt-field farming. This should be seen not simply a passive subsumption into, and a dependency on, the world capitalist economy but a strategic response based on choice by the regional society.
3. KATO Hiroshi (Hitotsubashi University, Faculty of Economics, Middle Eastern Social and Economic History)
Islamic Society as a “Market Society”: A Reconsideration
3-1 Definition of a market economy: should be divided into two - one based on the idea that the market is normative, mechanistic and with a non-historical view of the market, and the other based on the idea that it is empirical, interactional and with an historical view of the market. The former is based on the viewpoint of neoclassical economics that markets can be formed anywhere and at any time as long as there are no obstacles. The latter takes the stance that markets do not develop without the support of the system, whether national or social or something else.
3-2 Definition of capitalism: Those whose hold to the former view of the market, like Max Weber and Fernand Braudel, make a distinction between market economy and capitalism, considering that capitalism is a political and economic system which combines market economy and non-economic elements (political and social). Those who take the latter view (Karl Marx, John R. Hicks) tend to define capitalism as an extension of the market economy.
3-3 Periodization: SEKIMOTO’s paper concerning the aims of the seminar divided the premodern and the modern by characterising the former in terms of regional markets and long distance trade, and the latter in terms of a capitalistic market economy. Doesn’t this argument that capitalism grew out of local markets privilege agriculture over commerce? In the Islamic world, Ibn Khaldun”s Muqaddima defined cities as places where there was an accumulation of technical skills and money, and as large-scale markets of goods, labour and technical skill, and this can be considered to cover both the market economy and the commercial economy, incorporating both the city and the agricultural villages.
3-4 Pre-modern Islamic society had sufficient characteristics of a market society and a system was developed to protect property and contracts which made individual transactions possible in the market (particularly the use of money, provisions of the law and the establishment of credit).
4. FURUTA Kazuko (Keio University, Faculty of Economics, Chinese Economic History)
4-1 Premodern China possessed distinctive features of a market economy (the buying and selling of land, choice of occupation, the freedom of employment contracts), though deficiencies in the system have been pointed out. Agency occurred as a system to circumvent instability in opportunistic markets.
4-2 Agency is an intervention in the relationship between two people, from land transactions to employment and introductions. The agent possesses the necessary information regarding products, those doing business, and price, brings the two parties together, and forms a network of merchants through his links. The agent’s fee is understood as a combination of information costs and insurance costs against uncertainty.
4-3 Agency was confined to a particular place and a particular field. There was a guarantee on the spot according to the private individual, but for the businessman there was an awareness of the successive diminution of uncertainty regarding transactions, and this became the ordered system that living people perceived.
4-4 In the turmoil of the twentieth century a network of Chinese merchants grew up centring on Shanghai and stretching as far as Korea and Japan, among whom different kinds of money were exchanged and marginal profits from exchange were sought. In the Chinese economy, information and knowledge were given great weight, and in this sense, it was characterised by commercial
capitalism and information capitalism (IWAI Katsuhito).
5. Miscellaneous Thoughts (SEKIMOTO Teruo)
It is quite a contrast that ISHIKAWA’s report described an historical event, limited in terms both of time and place, while the other two reports directed our attention to a more abstract structure. In contrast to the existence in China and the Middle East of a “home-grown” market society, South-East Asia was rather a place where events and encounters between small local merchants and merchants from overseas were enacted repeatedly in different forms according to circumstances.
Here is the difficulty of comparison. For more than ten years now anthropology has been characterised by its move away from “structures.” On the other hand, there seems to be a current of change in history, moving from “events” to “structures.” What I have sensed of “structure” as it has come up in the reports and in discussion is that there is a tendency, not towards “long term continuity” within the framework of history, but towards a super-historical analytical concept, history as social science. When we discuss regions and civilisations disregarding the universality of the human being, there is a danger that we will end up doing no more than being able to say that something fits or that something can be said, a point from which no more constructive debate is possible, like an argument about national characteristics. We can borrow subtle concepts from specialty division like economics where theory and concepts are well advanced. However, my interest is more experiential - corresponding differences that appear in particular regions and civilisations under more or less the same conditions of time and circumstance. It is for this reason that the theme of capitalism and local correspondences was suggested, but the reports and discussion did not necessarily move in that direction. While I did not know what would come out of this seminar, the exposure to the kind of unexpected questions and ideas that generally do not come up within a group with more narrow interests and concepts has been very interesting. I think it is good not to proceed in too narrow and precise a direction.
I would like also to mention a few personal impressions. ISHIKAWA’s report, I felt, would make an interesting comparative study if he investigated the connections between the local rubber “smugglers” and the Overseas Chinese merchant network, as well perhaps of the relations between brokers of scented woods and Arab merchants, and with the administration and other Europeans.
I was deeply impressed by the clarity of KATO’s report that as the Islamic world fell before the modern west, the present situation is a different story from its past. While I agree with this, I wonder whether there is not underlying it the theory of historical continuity.
I was also impressed by FURUTA’s repeated emphasis in answer to the questions of several people that there is a process through which reputation and trust actually came into existence. This shares common ground with the remark made by KISHIMOTO in her report at the close of the seminar on contracts, that “formal, rational laws have at their base the (silent) consent of living people and practical custom.” Not the formal concepts of economics in the narrow sense but the broader issue of customary consent underlies this, I feel.